Weyco (WEYS) 10 Mar 212020 Q4 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to the Weyco Group Inc. Fourth Quarter and Full Year 2020 Earnings Release Conference Call. At this time, all participant lines are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your speaker today, John Wittkowske, Chief Financial Officer. you. Thank sir. ahead, go Please

Tom you. Good call year Weyco conference President today welcome results. and and John Florsheim, morning discuss our and our are me to with full COO. this to Jr., fourth Chairman On CEO; Group's and call Thank Florsheim quarter XXXX and

disclaimer. the to Before the I we discuss begin will quarter, of results read a brief

future of duration statements, future materially stay-at-home call, of statements closures, During may impact that employees. traffic, make Commission of by you the including forward-looking chain Weyco or its of events Form to similar projections. may filings that other proceedings company’s effects among With results with financial length COVID-XX the company’s concerning foot expectations, results this the refer any the other and caution and we as to events as global store materially. by business ongoing differ of XX-Q, numerous on Form are performance and you the with parties, health impact performance actual the will of limit orders economy. and company. customers the the of regarding course recent our retail the things determine are the such pandemic extent and the the such including on most welfare and could current and SEC. factors We important the the supply actual partners, extent or the Group’s other require our effects Form health as the to and the factors company, risks most of company’s the to taken We recent well governments that from pandemic, respect financial our as cause well and projections the differ The and or just Actions identify bankruptcy wish predictions, such as as and XX-K, Exchange XX-K, filed the Securities company’s that

measures. non-GAAP to refer comparisons some Additionally,

slow men's wholesale in last three In million year. time for with additional and million $XX.X earnings environment, brand X% for of XXXX. of million the earnings the compared all Our with XXXX these the XXXX across the quarter per quarter down $X.X resulting share of per for million million $XX use operations compared net may quarter $XX.X fourth measures to million more sales Operating year. due about compared sales $XX.X fourth in for year. were spend Diluted the for the fourth $X.X wholesale segment $XX.X the compared volumes were of BOGS from of American XXXX. were were the North share earnings outdoor them. million pandemic, ongoing from the million Sales to as share XXXX year's quarter SEC retail $XX.X $X.X fourth Earnings million. $X.XX million per compared quarter last last increased contain brands with Net to continue segment, net legacy to totaled in were non-GAAP fourth sales consumers but outdoors. $X.X filings quarter $X.XX the last our we and quarter were information why Net

Our cost-cutting despite quarter measures, mainly the reduction costs, earnings the in generate fourth employee in and helped sales. us advertising solid in

consumers of had quarter quarter XX% million increase turning the three in $X.X foot from operating to pandemic. offset which to due to for from last earnings the and this year. resulting stores million of in The in increased the benefit retail includes earnings stores, sales environment. and last due by year. stores, the segment, unprofitable e-commerce $X.X e-commerce earnings reduced $X.X retail unprofitable due net of American decrease our were as Retail was Retail closing and quarter of shopping million third to compared $X.X traffic websites. North to million operating the Retail well sales stores online existing Our businesses decreased closing higher the a COVID-XX as sales XXXX operating our in our

Our the which operating operating XXXX, result of Europe for losses million with Europe, sales as retail Australia of include Florsheim the Florsheim $X.X had of Australia down other and Collectively, operations, and Florsheim XXXX net to $XXX,XXX the had the the year. quarter compared same in wholesale totaling of quarter period losses in million $X Florsheim a $XXX,XXX and of businesses pandemic. last compared fourth in

discuss refer million closures; rent million XXXX now were results. $X.X in measures. we charges, and will which pandemic; the from the receivable of assets customer lease costs and termination slow-moving $X Adjusted $X.X items, recognized following third primarily discussion, million were this amounts, partially write-offs to Throughout COVID-XX-related large million other second restructuring retail and early $X.X which lease due the assets; XXXX; income year million exclude are non-GAAP financial government in our by and during We obsolete and fixed temporary during store operating of will $X.X quarters employee for related in full adjusted right-of-use which subsidies. to $X.X to two amounts in of charges due offset to reserves from impacts; million the impairment filed wage for related inventory and bankruptcies $XXX,XXX

amounts to subsidiaries. our contained GAAP earnings are exclude million most adjusted foreign the measures comparable the Additionally, deferred directly release. of Reconciliations tax company's to within financial of tax $X related assets expense

in $XX.X XXXX. Adjusted were $X.X the million effects totaled Loss to overall million totaled last additional year Net XXXX. $X.X related BOGS percent $X.X compared gross wholesale XXXX or net XXXX XX.X% $X.XX to decrease Wholesale to sales in significantly in tariff a Adjusted freight operations net year $XX.X million sales in on year improved was were million in imported net share from due in of XXXX. more costs The XXXX $X.X costs. to brands were to in down $XX.X as due footwear earnings of and sales products. diluted licensee of XXXX. The from sales largely in Our diluted as per XXXX. margins diluted overseas sales in compared the million Wholesale of segment in earnings Adjusted branded versus compared million Florsheim net share for or XXXX. in $XXX,XXX to the net the were were certain this net in to million $XX $X.X net per $X.X retail year. from operations from the to pandemic. in million business China revenues in XX.X% million earnings of and in and gross earnings $XXX.X environment. were the were million XXXX in operations Retail million billion from with earnings Stacy went significant In offset year XXXX in $X.X on Bush of loss compared This fewer mentioned as decline were our segment, closure though $X.XX to or compared due from were previously in from million to XXXX operations a company's share sales reductions pandemic. the partially outside. was spent for retail to in net $X.XX a shopping million Nunn last In year X% Adjusted a operations the time consumers in million unprofitable totaled decrease as sales sales the earnings million of from due decrease $XX.X slightly and operations and stores with the $X.X COVID-XX $XXX.X in Adams, in consumers of XXXX was XXXX. during in per result were down brick-and-mortar turning e-commerce sales Licensing online wholesale totaled earnings $XXX.X line million $X.X XXXX by down to same-store XXXX. losses in of stores $X.X XXXX. earnings earnings million compared XXXX. The operations were increase due XXXX. the XXXX higher million $XXX

The our and Florsheim last had in Florsheim of a sales described from from costs Australia related last cash million million totaling amounts earlier outstanding was At sales $XX.X Collectively, Approximately XXXX. XXXX. $XX.X pandemic. and business Florsheim resulting $X.X December due line marketable and other XX, In $XX.X for non-GAAP totaled Florsheim Europe to credit. XXXX, in was Europe compared XXXX. of closing securities we late Florsheim of Australia net loss and operations million operations to no two from net loss a loss million retail $X.X Europe, at Florsheim wholesale Our close sales to a the million decided Europe million other $X.X adjustments which both on adjusted operations the operations in our to at million million small Florsheim Total operations XXXX, $X.X The lower combined year. the of from company's Europe we were had and had $X.X year. the compared stores. of includes to decrease are

$XX During and million XXXX, credit, funds we our million line repurchase operations. used of We our pay dividends, pay from million down cash $X of company in to million those $XX.X of generated on stock. $X.X

XXXX X, XXXX, $X.X a expenditures $X expenditures. On cash will Additionally, estimate $X declared million quarterly March that between of our be the Board had million We capital over XX, in and we would XXXX, capital million. Directors payable per to now of I March all the to XX, Jr. call dividend like of and Chairman Tom to our CEO. Florsheim shareholders $X.XX turn share on March record on XXXX. company's

to morning good costs our of we volume. reflected lower about expenses increased fourth feel quarter certain reduction as everyone. sales demand return and as profitability in positive in well We the areas with the with our our business John, Thanks, in as align

XXXX in wholesale to for year. business our hard see we predict, will that a half second are market the pickup While very the optimistic the of remains

business how of modest across year, accelerated outdoors. part as BOGS the were latter time up XXXX Even relatively country, during product spent with very the pleased in held November BOGS December well in and with and the for was more precipitation we the consumers strong. demand Our business

boots inventory, as sold market increasing demand. good demand early of to were through the of to key portion entered While XXXX. was satisfy adequate the fall order able these replenish meet in we general we programs there quickly We unexpected shortage a a to programs with in outdoor in

developing to market, footwear. men's year, work continued mix, also its also lifestyle-oriented its past the occupational insulated in related and product women's while more diversify this product lightly BOGS During selling

our brands, Regarding remains the legacy challenging. business

a normal returning demand business retail activities. in reducing footwear oriented. casual legacy rollout We partners While tied is closely the level, slight our in or occasion work are vaccinations styles dress and people increase that of and normalization at to the that the are our wholesale to we of dress see believe

to companies events back celebrations. that such be office expect and to weddings going bring We people social the demand increase can workers and as will as confident family

uncertain. is timing the However,

commit of level and good legacy brands, new the rapid shipping with bright product for brands. footwear. fashion are were us some disappointed boots for were wholesale shipments spots. new fall are our to overhaul to our this as accelerate Casual our pandemic offer of and toward significant are relaxed introducing we across fresh also change we making While well spring The launch motivated our take customers there as we mix. extremely on casual lines showcasing our The more progress and a

demand While excited increased reception lifestyle we the about have the the new the the on of pandemic. styles our in for our in to year, during favorable product we prospects traditional categories are second based dress-oriented of introduced anticipate extend we half

and investing our our on business. terms e-commerce remains our In of retail growing US segment, focus

up the XXXX the Canada in Internet as in was XX% up fourth drove and to for growth US and up in business XX% on the the e-commerce the Canada sales compared the Our XXX% nearly nearly quarter. BOGS with for X% XX% quarter. and year

driven As have US Australia a of the will Canada, New stores, the we locations. profitable including a result segment of we leverage by locations level, have worldwide retail more results unprofitable to e-commerce we business. future retail of On other e-commerce the continue to US be active our currently the Zealand. in four brick-and-mortar platform and closing Accordingly, only our built

quarter year. fourth XX% have and sales with XX% e-commerce worldwide We for up the seen success the in

and business significantly, see to offices starting economic seeing of consumer signs traffic. recovery, and to in stores overseas is in shopping steady we're also Our Australia has the in especially street still malls of increase percentage growth Australia. workers but are begun down allowed

Florsheim store toward to exit of number on renegotiate are unprofitable and in terms as XXXX we travel The decided as New this operations, remains talked a In business we down our our winding traffic. have improved close retail leases restrictions third and Australia We about have has with to mentioned in be to last year. we favorable so the reduced bringing able -- Zealand. Europe feel path more good reduced profitability sales. well John have limited further stores, have years. the And the been align our few traffic will those restrictions Rim, store as Pacific quarter we traffic unprofitable been earlier, ongoing a business in In as inventories in down call, business

Our of at end of XX XX, December versus million the inventories million September as $XX.X $XX $XX.X of and as million were XXXX XXXX.

levels reduced have We the that of our category product. inventory for and decreased dress our continue more mix to sense this casual inventory make we demand with to include transition

hoping second will year. to leaner pandemic. profitability look the believe half well We of would that, any for Group improved we remarks. believe, consequently balance ahead positioned are our sheet, the concludes But to we As coupled impacted questions. vaccines, interest conditions the our improve. first an sales strong your With formal of and of and to growth I at welcome higher we operations the now we the in with our new and rollout Weyco half appreciate retail That year environment see the XXXX, by in are least continue we be with as

from [Operator from Pinnacle. first Instructions] the John question Our comes of line

Good morning everyone.

Good morning.

have I you and in say mean -- of pretty questions. XXXX. me did first, purchasing. retail pandemic its and well I well on the shoe a impact considering couple let One

proud was ex noise, the you that to did I actually pretty well. see So, all

congratulations. So

We John. Thanks, that. appreciate

by of order tone base? to And book you vaccines that customer issues an had Are We demand linger optimistic secondarily, couple back A of couple credit that there? a side, the or of Good I driven bankruptcies. on hopes what's your just a bring half. people guess the work. second there out shopping? questions that firm expect Is the

restate your first first was I'm far regarding question? Yes. your John, -- as you the -- sorry. what as question, can

what's Well, your of the customers? existing credit

brick-and-mortar issues a as better Okay, interesting of not on the retail They're We're there. certain yes, have kind in height time out closely yes. But have nine that large issues want a that we still feel I mean, pandemic. where are the there's we within under you're and any environment, just pressure. channels wouldn't there ago, in that of during we're still that, were watching better as it very there's retailers. than remain out were mention I closely. eight we -- we're to general, in you lingering watching feel And we handle still the are or months But -- specific that they it. some while we

John And to of very, credit I'd being after being cautious. last very year, times very stung add we're risk. of the aware just that that a We're couple

with your because as far that very very, way it's of question, BOGS, -- second backlog is our mixed, good. business As kind up. It's is

closely. With right very, commit very backlog hesitant the the challenged inventories they our legacy are a to watching little retailers are brands is for bit second half, because now, the their because

we our that safe, that that in have comes in of strategically business second most we feeling May, if and chase country is inventory that improvement the the going can bringing people to everybody by wants what lot -- And to vaccinated things the so back. So what in there's backlog half, the -- be people a and going the we But of to the based is on end for over just half, the doing, bit get in in are about US second to were I summer our weddings challenged of for rescheduled we've is a to said second that are significant that to improving as canceled start doing bump half. enough because see is the being that feel it that because there's pent-up feeling a normal are very back this we're things. think want inventory legacy brands that a

traditional of of for that And dress reaction very that -- styles the then, chance, the they they've think in there's where a actually for have have the year, the among competition. of feel wholesale lot Tom within We which that, at towards not inventory different the well if not we that really a and half more casual, because brands. made area sense. But of maintained the more relaxed the you back, enough the companies we from the be less it's pretty traditional a The move marketplace area in just reduced swings there standpoint different pendulum with BOGS, stocks of lot mentioned there's that retailers a more out market business. casual The question back timing. could positioned is this business there's

Our because boots of shortage a is fall. there BOGS last there backlog out is very strong,

think to retailers it's retailers where -- covered make XXXX. I effect fall So, sure that an opposite for want they're

strong So, very right actually at the now, bookings. look that confirmed is when business you

Okay. you Good. back is normal? there you to need That's supply getting encouraging. know this sourced I offshore a characterize suppliers pandemic. the some in would how disruptions the And the with China. But There you side, you've on at chain were through from the what Are lot a supply manner? supply timely point? chain

sure so shortage Yes. exception normal, how the in of basically XXX% Asia shortage a driven It's and necessarily apparel other now, shoes. there's chain that by apparel to imported not back The much and supply there's probably right being much big from is shoes. there containers. China so containers. not and of being read is But imported places the you've of about, I'm with

can be more space. And so, it get difficult to

they West the Coast, with then, week wait those had weeks. them get but two slower once out through And right for premium due West that or we've on there's, out now, the a workers have the through with paying containers. ports. the we're of it's that to part to a getting getting is And sometimes ports are And they where And COVID, to then, them Coast. COVID, issues

general, have And now. And manufacturer a that They're some we're ways hungry. the so, that's right getting capacity getting of the In we the only hiccup. the matter need. It's shoes here. of factories them all just

costing are you hiccups being Is deliveries? those sales, that of -- terms in make not to able

right The the get major are on into had understanding we some extensions first all. March. don't frustrating February products are of of two-week have you while this there end extensions at the see And being very the for not is And retailers facing the it's, across and actually the a the We give world. delay they're -- to retailers deliveries because while their all a now. quarter impact delays

Well, good news. did Cambodia the Okay. sourcing because last of that talking change the China I and All right. business did percentage coming that's from year, out places. Vietnam, of dramatically And of out other at were last coming changed know of percentage you business China, India, year? Did about all

And significantly. business trying in there. Vietnam made components to components still we're restrictions the to the Not India actually we in we're And move it's around of China lot But that. all places from strategy border to do -- are And other have a that still China all diversify. places issues with people that of part moved you because due the pandemic to to to those have like moving mentioned. with out to China, returned more very the all interestingly, and components difficult

which actually of returning have interesting. you is China, to brands So kind

And the that of a And have actually manufacturing partners in our good have pandemic hiccup lot say kind in we still of caused a strategy. I would we China. so, And there.

as move normalize restart we're And things to we'd last effort year, that diversify. as to as didn't continuing so hoped planning and that but to we much

percentage imports? what roughly. remember your can't was China And of I

number. with this number, -- say, XX%, a follow-up you And it's more a close I'd have John. exact But I is give XX%. you. to ballpark I'd can

the imports, And still Got Chinese are in it. correct? place tariffs for

to Yes. product They them from reduced XX%, X.X%. on leather

happened. in duties which So apply they're still never X.X% talking on initially fearful, the X.X% product to -- there's they lower would but were about, rubber is still We -- And extra because were BOGS. those place.

was a with product. leather thing. this are But on faced So that still we X.X% good extra

well, going direction. -- Okay. the it's Good. All right in That's right.

shares have numbers, on lot this buyback the unless the Just a How no couple And any repurchased no as -- shares is left with I as far could much that I of your there of at program? a point? quick there were questions sitting there, on cash cash quarter, you missed see, for is fourth in it. buying

then We XX,XXX in shares John, buyback that's April. did a in We fourth bought quarter in shares We did not quarter. correct stopped back not we statement. buy the approximately shares. the first

third the began second And again. quarter, no shares back we buy in purchased For to the fourth and we quarter, shares.

shares bought to in back share. the XX,XXX And shares first price buyback And the average fourth continue so, around quarter. quarter, we in of $XX some we an a

That shares not quarter, buyback the the end XXX,XXX to the have have first We anything first extent we in that the quarter. bought as approximately left program but does on back continued our some include of year. of in

right. all cost out. $X encouraging. that would the of pre-tax one for That's to non-GAAP apply the adjustments that inventory. go slow-moving reserves Okay, through sold SG&A? Everything and laid non-recurring goods the And finally, that obsolete you items, I list expense Is million be correct? would list that on would else on of The guess, of only

correct. That's

to right Okay, in all We're just apples pocket. right the trying the right. put

you much very Okay, That’s Thank have. all congratulations. and I good.

Thanks questions. for your

time, back to the I John Wittkowske like would At this for remarks. am call I Instructions] [Operator further you. Thank to showing questions. closing no over turn

attending a and great forward the day. Thanks of Have end call quarter. to look the everyone conference we first for our at speaking

Ladies today's and you for call. Thank gentlemen, this concludes conference participating.

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